Abax, chairman lower MBO offer for Fushi Copperweld
Abax Global Capital and the chairman of Fushi Copperweld have lowered their buyout offer for the Chinese company. They are proposing to pay $9.25 per share, down from $11.50 announced in November of last year, which values the deal at about $353.4 million.
A special committee convened by the wire manufacturer's board has been examining the management buyout offer and is reviewing the latest proposal, Dow Jones Newswires reported. The company said that the offer doesn't contain customary financing commitments and remains highly confidential.
Fushi is one of a number of Chinese companies that listed in the US via reverse mergers. After financial inconsistencies were uncovered in filings made by several of these companies, short-sellers and hedge funds have begun to scrutinize many more, searching for weaknesses. Stocks have fallen across the board, with Fushi down 18% year-to-date.
Management teams have responded by seeking to privatize their companies - often with private equity backing - with a view to ultimately relisting in Asia.
As it stands, only nine take-private deals have been completed. Two of those were strategic acquisitions and, of the seven management buyouts, three were supported by private equity. They include Abax-backed Harbin Electric, which went private in November despite persistent attacks from short-sellers.
Fushi is still trading at a 21% discount to its offer price, as is the case with most US-listed Chinese firms subject to management buyout offers. This is said to reflect a lack of confidence in the deals getting done.
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